Opinion: Tackling the personal debt crisis must be a political priority

Listening to some of the rhetoric delivered (mostly) by men in sharp suits at the Oireachtas finance committee this week I was reminded of an iconic scene in John B Keane’s The Field. We see the Bull McCabe, steadfast in his determination to go to his grave still holding fast to the plot of land he believe is his, warning the parish priest and, by extension, the outsider returning to his ancestral domain, that “no collar, uniform or weapon will protect the man who stands in my way”.

All this talk of banks issuing thousands of letters threatening to repossess homes to meet Central Bank targets for engagement with distressed mortgage holders needs to be seen within the context of Irish political realities. These letters may have some impact in prompting people to engage with their banks but there is a hollowness to some of the threatening behaviour.

There will be no mass repossession of debt-laden homes in the Republic. There will be and should be repossessions of the homes of those abusing the system to live in mansions they could never have afforded. There may also be large-scale seizures of the titles of investment properties, ideally without impinging on the lives or rights of those renting the properties. However, I’ll wager there will be few evictions on foot of mortgage defaults on those domestic properties in which overstretched borrowers reside.

RepossessionBank of Ireland chief executive Richie Boucher, whose loan book is less distressed than some others’, said that while the bank had initiated legal proceedings in many cases he did not see it getting into repossession territory. The legal threats are intended, it seems, primarily to get customers to talk to their bank.

The other reality, however, which may upset some commentators at home and perplex some looking at us from outside, is that mass repossession of homes is just not politically palatable in the Republic.

The Irish have not rioted on the streets during this crisis even though at times they had almost as much reason to do so as the Greeks. Instead they have confined themselves to rioting on the radio and venting their frustration and anxiety by ringing phone-in shows. They rioted too at the ballot box at the 2011 general election, thrashing the outgoing government parties. However, a pattern of large-scale home repossessions could precipitate riotous behaviour by the Irish.

In the main the distressed Irish population has stoically soldiered through five years of crisis hoping that, aided by overall growth, collective and individual financial circumstances might improve.

That growth hasn’t come, the financial stresses have not eased much and many people are now close to breaking point. If over the next couple of years people look around their neighbourhoods and communities and see families evicted on foot of orders for possession and know or even sense that those families are genuinely squeezed, it is those events that will trigger direct action on our streets.

Unpredictable consequencesIn advancing such a scenario I run the risk of being accused of scaremongering, even of serving the interests of those engaging in strategic default. My purpose, however, is to seek to paint a picture of the stark and unpredictable consequences that could flow, by accident as much as design, from an enduring failure to talk about the personal debt crisis. Our banks and political system has, after all, been accused by some of failing to face the reality of the need for repossessions.

The banks’ reluctance in this respect arose in part from the legal implications of the Dunne judgment, which have since been dealt with by changing the law. There has also, however, been an understandable reluctance to tread upon the at times irrational Irish psychological attachment to property ownership and to holding on to land even after someone else has gained legal possession of it.

Long before it reaches any potential crisis point that could bring people on to the streets, the State’s enduring mortgage crisis is incurring wear and tear on our economic system and on our political system. Along with the persistence of terrifying levels of long-term unemployment, the mortgage crisis creates a potential for real political volatility. Any conclusion that the Irish democratic processes have weathered our current economic storms is premature until these two issues have been tackled seriously.

The finance committee hearings this week were useful in enabling our parliamentarians to challenge bankers publicly on how they were dealing with the mortgage crisis. Parading the bankers before Oireachtas television cameras served a useful purpose in demonstrating parliamentary accountability. The hearings also did much to remind us of the depth and scale of the mortgage problem.

The hearings could do no more than scratch the surface of the problem, however. As the number of distressed loans continues to rise – albeit, it seems, more slowly – there is still little real engagement with the tens of thousands caught in mortgage arrears difficulties and, it seems, little recognition of realities around their capacity to repay.

After next month’s budget, finding ways to accelerate solutions to the personal debt crisis will have to be the political priority.

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